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Shazam financials show revenue growth flattened in 2017 ahead of Apple acquisition


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Apple completed its acquisition of music-identification app Shazam this week, but now the latter company has published its latest (and likely final) set of public financial results, via the UK’s Companies House.

They reveal Shazam’s figures for the 2017 calendar year, with the company having accepted Apple’s acquisition offer on 10 December that year.

What do the financials show? Shazam was reaching more than 400 million annual active users in 2017, up from 300 million the year before. However, Shazam’s growth in revenues flattened out in 2017: it generated turnover of £40.8m (around $53.7m), up just 1.4% year-on-year, compared to the 14.5% growth that Shazam recorded in 2016.

(As an extra point, if the reports that Apple paid $400m for Shazam are true, that would suggest a valuation of 7.4x its revenues, based on 2017.)

shazam financials 2017

What about Shazam’s profitability? The company reported a net loss of £17.7m for 2017 (around $23.3m) compared to £3.7m ($4.9m) the year before.

However, one factor in this was ‘non-recurring / exceptional expenses’ of £9.6m which a note by its directors refer to as “the company invested in a number of strategic growth initiatives and incurred a number of one time transaction related expenses”.

They claim that excluding those costs as well as a foreign exchange loss of £1.7m in 2017 means that Shazam “saw year on year growth in profit after tax”.

To be blunt, though, none of this now matters: Apple has bought Shazam for strategic reasons rather than for its profitability – witness the company’s announcement this week that its first move post-acquisition would be to make Shazam ad-free.

One other relevant point, though: the historic trends for usage of Shazam, rather than users. Digging back through the company’s past financial results, Music Ally tracked the growth of ‘daily requests’ on Shazam – individual identification requests of tracks (or ‘tags’ as the company referred to them back in the day).

At the end of June 2011 – Shazam’s financial year used to end on 30 June – the app was generating 4m daily requests. That grew to 10m by June 2012; 15m by June 2013; 19m by December 2013, and then 20m by December 2014.

It was still 20m in December 2015, but the figure was not published in the 2016 or 2017 financials, although Apple’s press release this week said that “users identify songs using the Shazam app over 20 million times each day”.

In other words, usage of Shazam appears to have been flat since 2014, in terms of the number of daily requests – and this includes the most recent year (2017) when the app added 100 million annual active users.

But again, this is of historical interest only: the interesting thing now will be how Apple will bake Shazam into its iOS software, perhaps even making its identification passive and constant, like Google’s music-ID feature on Pixel smartphones is. We may have to wait until iOS 13 in 2019 to find out.

Stuart Dredge

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